Online Buy Now, Pay Later Usage Driven in Large Part by Groceries
According to newly released U.S. e-commerce insights from Adobe Analytics, which is part of Adobe Experience Cloud, resilient online shopping demand for groceries reflects the lasting effect of habits adopted during the pandemic. At the same time, however, ongoing economic uncertainty is spurring many consumers to delay payment for purchases by using buy now, pay later (BNPL) options online.
In 2022, consumers spent $86.8 billion on groceries, a 10.8% year-over-year increase. This strong growth contrasts with that of electronics, which remains the No. 1 category by total spending ($202 billion), but grew more modestly, at just 4% year over year. The growth trend for groceries has persisted in recent weeks: This past February, the category grew by 26.7% year over year, driving $8.4 billion in spending.
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“E-commerce demand has remained resilient in an uncertain economic environment, driven in part by lasting pandemic habits where consumers had no choice but to leverage online food and home furnishing shopping services,” noted Vivek Pandya, lead analyst at Adobe Digital Insights. “Now consumers have embraced the rich e-commerce experiences that made them feel comfortable getting these necessities delivered to their doorsteps, making these categories new growth drivers in the digital economy.”
Further, rising costs of living have pushed consumers toward BNPL services that allow them to pay for purchases over time. In 2022, the share of online purchases using BNPL increased 14% year over year, with revenue from BNPL growing 27% year over year. In the first two months of 2023, BNPL order share was up by 10% year, although revenue plunged by 19% year over year, indicating that consumers are using this payment method for smaller purchases. In the first two months of the year, groceries’ share of BNPL orders grew by a whopping 40%, according to the data.
“The rise of [BNPL] usage for groceries tells us that consumers are likely making bigger purchases online to take advantage of special promotions and stock up on staples, thus managing living expenses in more flexible ways,” said Pandya.
Adobe Analytics additionally found that mobile shopping by smartphone is likely to overtake desktop shopping this year; that larger retailers are seeing more success with mobile shopping; that the lowest pricing tier grew its share of sales significantly in grocery, where it was up 35.6%; and that demand for curbside pickup had fallen to 17% this year, from 23% in 2021, although curbside pickup at grocery grew 8% year over year in early 2023. Regarding this last finding, Adobe Analytics noted that it “presents an opportunity for retailers: Shoppers who leverage curbside pickup rather than shipping to their homes may buy additional items once they’re at the store.”
The data, which covers more than 1 trillion visits to U.S. retail sites, 100 million SKUs and 18 product categories, was released at the recent Adobe Summit digital experience conference, which kicked off March 21 in Las Vegas and virtually. Adobe is based in Mountain View, Calif.
